SINGLE BLOG ARTICLE

SETA Grant Regulations: An Update

Judgement was handed down by the Labour Court in August 2015 in the litigation brought by BUSA to challenge aspects of the 2012 SETA grant regulations, specifically the change in mandatory grant payment of only 20% of employer’s 1% skills development levy.

The Court declared Regulations 3(11) and 4(4) of the 2012 Grant Regulations to be invalid, and it set them aside. However, it suspended the effect of that order until 31 March 2016 in order to give the Minister an opportunity to rectify the position by introducing a valid replacement of the invalid regulation.

The Minister initially took steps to appeal against the Labour Court judgement and order, however the Minister instead re-promulgated the invalid regulation in identical terms, prior to the order coming into effect.

The Minister took administrative action by issuing Government Notice 39592 on the 13th of January 2016 in which he aimed to re-promulgate regulations 4(4) of the SETA Grant Regulations in terms of section 36 of the SDA. Regulation 4(4) focuses on the percentage of levies paid by an employer during each financial year

It is our opinion that the January 2016 notice should be set aside as the Minister’s decision to re-promulgate Regulation 4(4) is inconsistent with the constitutional principle of legality, is not rationally connected to its purpose and was adopted in an unlawful manner.

Since the DHET and the Minister appear to hold the contrary view, and since this view will have the effect of preventing SETAs from paying, or a company from claiming the 50%, BUSA has approached the Labour Court on a semi-urgent basis for a fresh order setting aside the January 2016 notice to the extent necessary, and declaring both that the 50% applies and that the sweep doesn’t.

The reduction in the mandatory grant bears significant consequences for all levy paying companies and we will continue to update you on the matter.